SEC Filings

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enhancing its product and service offerings, broadening its geographic market
coverage or generating economies of scale. The Company will only pursue
acquisitions which meet its standards for quality of service and are compatible
with the Company's culture. Consistent with this strategy, the Company acquired
the assets of ABKB, a domestic real estate investment management business, in
late 1994 and CIN Property Management, an investment management business in the
United Kingdom, in late 1996. Through these acquisitions, the Company added
over $5 billion to its assets under management, extended the Company's
securities advisory capabilities and established the Company as one of the
largest managers of real estate investment equity capital in the United
Kingdom. More recently, in April 1997, Galbreath, a national property
management company with 71 million square feet under management, was merged
with the Company. This merger expands the Company's market presence in Ohio,
Pennsylvania, New York, Florida and other key markets and offers the potential
for significant economic synergies with its Management Services group.
PURSUING CO-INVESTMENT OPPORTUNITIES
The Company intends to accelerate its strategy of co-investing with its
investment management clients, to take advantage of recovering real estate
markets. As of March 31, 1997, the Company had a total net investment of $15.8
million in 33 separate property or fund co-investments. The acquisition cost of
the properties acquired through these co-investments exceeds $1.0 billion.
Existing co-investments consist primarily of office and hotel properties
purchased within the last three years.
The Company's co-investment strategy is supported by its broad fundamental
real estate research capabilities, which include identifying trends in
geographic regions and property types. The Company's extensive knowledge of
local markets drawn from each of its business segments facilitates the
identification and evaluation of specific investment opportunities. Co-
investments provide the Company with the opportunity to participate in any
returns generated by such investments and provide services related to the
acquisition, financing, property management, leasing and disposition of such
investments. As a result of the Offering, the Company will have additional
financial flexibility to pursue its co-investment strategy.
BUSINESS SEGMENTS
The Company serves its clients through its three principal business groups.
MANAGEMENT SERVICES
The Company's Management Services group develops and implements property
level strategies to increase investment value for real estate owners and
optimize occupancy costs for corporate owners and users of real estate. The
Management Services group provides three primary service capabilities: (i)
property management and leasing for property owners ("Property Management and
Leasing Services"); (ii) facility management for properties occupied by
corporate owners and users ("Facility Management Services"); and (iii)
development management for both investors and real estate users seeking to
develop new buildings or renovate existing facilities ("Development Management
Services"). As of March 31, 1997, the Management Services group had property
management, leasing or facility management responsibility for approximately
132.7 million square feet of commercial space. In 1996, the Management Services
group generated revenue of $71.9 million and operating income of $10.7 million,
representing approximately 41% of the Company's total revenue and approximately
40% of the Company's total operating income.
Based on the 1996 CPN Survey, the Company is the largest property manager of
office buildings in the United States and is the eighth largest property
manager in the United States overall. As a result of the merger of Galbreath
with the Company, the Management Services group assumed management
responsibility for
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